Gold Prices Continue to Fall
Gold prices have hit their lowest mark since February 3, at $1,208 per ounce, as the U.S. Federal Reserve seems likely to raise interest rates by mid-March and global demand for the commodity continues to drop.
A recent report on jobs from ADP, LLC has shown a strong uptick in jobs created in the United States last month, compared to the same period a year ago.
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Fed Chair Janet Yellen said last week that if the economic outlook continues to look strong, the central bank will raise interest rates. Such a move, along with the booming economy, will likely continue to see gold prices fall. (Source: “Gold futures hit 1-month low after ADP report shatters estimates,” CNBC, March 8, 2017.)
The Federal Reserve board members will meet from March 14-15, when it is likely that they will raise interest rates.
Gold prices have also suffered due to flagging international demand. Local jewelers in India—one of the larger consumer markets for gold—have seen a shrink in gold purchases. The end of the wedding season has also set the commodity into a slump, according to traders. (Source: “Gold prices slump deeper on weak global cues, muted demand,” The Times of India, March 8, 2017.)
Gold prices took another hit as Bitcoin (BTC) prices have also surpassed the commodity for the first time in the online currency’s history. BTC is often seen as a direct alternative to the precious metal and, with gold’s continued slump and Bitcoin’s rise, some investors are turning to the cryptocurrency to serve as a risk-management asset.
Next week will also mark the Netherlands’ national election, which could spur gold prices upward. On March 15, the Dutch general election will take place and, if an anti-euro party comes into power, there could be a growing interest in buying gold as European investors may seek to secure their assets against the potential dangers to the euro.
